He acknowledged that while the ECB's previous tightening of monetary policy effectively reduced inflation following the energy-price shock from Russia's invasion of Ukraine, current monetary conditions remain tight.

Panetta emphasized that the European economy is struggling, particularly Italy, which is facing high real interest rates and the withdrawal of fiscal stimuli.

He pointed out Italy's low growth drivers, including limited innovation, underinvestment, and a fragmented industrial base reliant on traditional sectors.

Fabio Panetta, the Governor of the Bank of Italy, called for additional interest-rate cuts from the European Central Bank (ECB) during a World Savings Day event held on October 31, 2024.

Policymakers are currently discussing the potential for further interest rate reductions and how to effectively communicate these plans to investors.

The ECB has already enacted three rate cuts of 25 basis points each in 2024, with the most recent reduction bringing the key interest rate down to 3.25% on October 17.

During his address, Panetta directly appealed to ECB President Christine Lagarde, highlighting the need for more cuts to support the economy.

Additionally, Italian officials, including Deputy Prime Minister Antonio Tajani, have suggested revising the ECB's founding treaty to expand its role beyond inflation control to include support for economic growth.

Panetta has been a strong advocate for rate cuts, first raising the issue in his inaugural speech as ECB governor in November 2023.

In response to political pressures, Lagarde affirmed the ECB's independence as outlined in the EU Treaty.

Panetta concluded by stressing the importance of being mindful of the real economy's weaknesses amid declining inflation rates.

Panetta warned that without a solid economic recovery, there is a risk of pushing inflation significantly below the ECB's target, complicating monetary policy.